Finance, Test Bank - Download as DOC

							                  GCSE Finance Test
                Year 10 Business Studies

1. There are a number of sources of finance available to a
business. These can be classed as either internal or external
sources.

(a) From the list below put a tick in the box next to each one
that is an
external source.
    Bank loan
    Retained profits
    Sale of assets
    Sale of shares
    Venture Capital                                         [3]

Banks will not lend large sums of money to a business unless it
can provide security.
(b)(i) State the meaning of the term ‘security’.              [1]
(ii) State an example of an item a business could use as
security for a bank loan.                                     [1]
(c) State two reasons why a bank would insist on security
before granting a loan.
Reason 1                                                      [1]
Reason 2                                                      [1]




                                             Please turn over
ScreenScene plc needs to raise £200 million to modernise
existing cinemas and to fund the building of new facilities.
Finance options available are:
    Share issue
    Trade Credit
    Sale and lease back
    Bank Loan
    Overdraft

(d)(i) From the list above choose two methods that are most
suitable.
Method 1                                                   [1]
Method 2                                                   [1]
(ii) Which is the better option of the two methods?        [1]
(iii) Give two reasons for your choice.
Reason 1                                                   [1]
Reason 2                                                   [1]

Look at the Cash Flow Forecast January 2009 - April 2009
for ScreenScene plc Ellesmere Park Multiplex.

(e)(i) In the Cash Flow Forecast the cost of insurance, payable
in April, has been left out. This costs £1000. Enter this in a
suitable box in the Cash Flow Forecast.                        [1]
(ii) Enter the values missing from the three grey boxes.       [3]
(f) At the end of which month does ScreenScene plc first
appear to have a cash flow problem?                            [1]
(g) Suggest the most appropriate source of finance to deal
with this cash flow problem.                                   [1]
(h) State two reasons why businesses may suffer from cash
flow problems.
Reason 1                                                       [1]
Reason 2                                                       [1]